Jan 16, 2005—It would be nice if CEOs could approve the purchase of RFID equipment, appoint someone to oversee the installation and then focus on other issues, such as growing the top line. But taking that approach is risky. Like the Internet, RFID is a technology that will eventually touch every part of every company’s business. CEOs who set the overall direction and provide leadership will ensure that their RFID deployment drives the company’s larger strategic initiatives forward. Here are the 10 things that CEOs need to understand about RFID today in order to set their company on the proper course.

Widespread adoption of RFID technology might take years, but it’s inevitable.
Even though major organizations, including Wal-Mart, Metro Group, Target, Tesco and the U.S. Department of Defense, have publicly committed to using RFID to track goods in their supply chain, there are still many companies that are waiting to see if the technology will spread beyond the retail, consumer packaged goods and defense industries. It will. The reason: RFID has the potential to solve a wide variety of problems, such as counterfeiting, inventory inaccuracies and complying with the increasing number of track-and-trace regulations (see Coping with Regulations).

RFID offers companies the potential to achieve a new level of business efficiency. Right now, adoption is being driven by a small group of very large organizations in the United States and Europe. But all companies in all industries will be able to achieve benefits as hardware prices drop. “RFID will be pervasive around the world, so companies are going to have to develop a pathway to adoption sooner or later,” says Sean Campbell, a partner with IBM Business Consulting Services.

RFID is infrastructure that needs to be leveraged across
the enterprise.
Many CEOs are looking at the cost of an RFID system and wondering where the payoff is. But RFID is not just a supply chain technology. “This is a technology that’s going to provide an infrastructure for doing a lot of things,” says Pete Abell, cofounder of ePC Group, a consulting firm. “It’s going to impact the whole organization.”

Abell recommends that CEOs set up steering committees that include senior executives from all functional areas of the business because it’s impossible for supply chain and IT managers to know everywhere RFID can be applied profitably. For example, heads of corporate security are seldom put on a RFID steering committee. Yet, RFID could play an important role in helping companies to comply with regulations designed to reduce the chance of terrorists using a shipping container to sneak weapons of mass destruction into a country. “You want a committee that can look at all of the possibilities and make right decisions about where to use the technology first,” Abell says. “It goes beyond just supply chain, logistics and IT.”